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Jinxin ouyang


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Jinxin ouyang

  1. 1. Can public-private partnership deliver better infrastructure services? Position paper 1, JINXIN OUYANG, 322407
  2. 2. CONTEXT  Background  Arguments about the effects of PPP  Case study  Conclusion Background The term ‘PPP’ was first used in the USA by the federal government in the 1960s as a tool for stimulating private investments in regional economic development and inner-city infrastructure (Fosler & Berger, 1982; Beauregard, 1997; Linder, 1999). From here, the concept has spread throughout the world both as an alternative procurement option for the public sector and a good investment opportunity for private investors; thus diminishing the government’s tasks and responsibilities (Pierre, 1997).
  3. 3. Argument about the effects of PPP • The PPP has the potential to strengthen the quantity and quality of basic infrastructure such as water supply, transportations and telecommunications. It can also broadly apply to other public services such as school, hospitals and prisons. • The PPP can effectively reduce the construction period by undertaking the design and construction concurrently rather than sequentially and discouraging changing the existing project design (NS, 2000). • The PPP is advantageous to heighten labour market participation and raise the rate of transition from unemployment to work. For instance, the European Commission has realised that the PPP can provide more employment opportunities and welcome the co-operation between the public and private employment services by taking some (2009).
  4. 4. Case study: Hong Kong • The area of Hong Kong is 1,104 km²and its population is about 6.99 million (Census and Statistics Department, 2008). Because of the hilly landscape and large number of outlying islands, only a relatively small portion of land is usable for development. Besides, due to rapid population growth Hong Kong has become more densely populated over the past few decades. Hong Kong has a good public transport system, particularly mass transit railway (MTR). It is Government owned, but it is managed by an independent corporation whose strategy is to operate under prudent commercial principles with unsubsidized fares. Figure 2: Market share of franchised public transport Source: Transport Department Figure 1: MTR map Source: Transport Department, 2009. Figure 2: Hong Kong Map Source: Land Use Department
  5. 5. Counter argument against PPP • The enhancement of value for money and innovation via the PPP is questionable because low costs are always considered as the primary selection criterion so that it is hard to achieve the best value between costs and performance (Gansler, 2003; Dewulf er al., 2004). • Public interest may be endangered due to the conflict between the private sector’s profit-seeking goals and public values. Besides, at the beginning of a project, it is difficult to determine a universal public interest that includes feasible performance indicators for the end result. • The partnership and the private or public sector may suffer from the disharmony. On balance, PPP is regarded as a viable and necessary option based on the combination of the skills, expertise, and experience of both the public and private sectors to deliver higher standard of services to customers or citizens.
  6. 6. References Fosler, R. S. & Berger, R. A. (1982). Public-private partnership in American Cities. Lexington: Lexington Books. Beauregard, R. A. (1997). Public-private partnerships as historical chameleons: the case of the United States. London: Macmillan. Crump, S. J. & Slee, R. (2005). Robbing public to pay private: two cases of refinancing education infrastructure in Australia. Journal of Education Policy, 20 (2), 249-264. English, L.M. & Guthrie , J. (2003). Driving privately financed projects in Australia: what makes them tick? Accounting, Auditing and Accountability Journal, 16 (3), 392-511. Stainback, J. (2000). Public/Private Finance and Development: Methodology, Deal Structuring, Developer Solicitation. New York: John Wiley & Sons. HM Treasury, (2000). Public Private Partnerships-Government’s Approach. HMSO, London. Hambros, S. (1999). Public-Private Partnerships for Highways: Experience, Structure, Financing, Applicability and Comparative Assessment. Council of Deputy Ministers Responsible for Transport and Highway Safety, Canada. NS, (2000). Review of Public Private Partnership Process. Retrieved August 29, 2010, from Hambros, S. (1999). Public-Private Partnerships for Highways: Experience, Structure, Financing, Applicability and Comparative Assessment. Council of Deputy Ministers Responsible for Transport and Highway Safety, Canada. Peter, B. G. (1997). With a little help from our friends: public-private partnerships as institutions and instruments. London, Macmillan.